Would-be used oil reprocessor Probex announced last week that it has entered a joint venture agreement to build a 120,000 metric-ton-per-year plant in France.
The announcement, included in a Dec. 26 filing with the U.S. Securities and Exchange Commission, puts two publicly identified projects on Probexs plate. The other is a plant in Wellsville, Ohio, that would process up to 183,000 metric tons of used oil per year.
Addison, Texas-based Probex announced the Wellsville project two years ago but is still seeking $100 million in financing to pay for its construction. Vice President of Sales and Marketing John Fahey told Lube Report yesterday that the European project is off to a faster start.The partners expect to finance the $50 million facility with 80 percent debt and 20 percent equity. The filing did not identify the European partners, and Fahey also declined to identify them.
This project may be a little behind Wellsville now, but it could catch up, Fahey said, adding that the partners hope to build the French plant within two years. Weve wanted to build a plant in Europe all along, and were excited because we think this is a good opportunity.
The joint venture partners have not announced a site for the French plant, which, like Wellsville, would use Probexs patented ProTerra reprocessing technology. The company claims the process yields higher quality base oils than standard reprocessing techniques and that its products will perform on par with virgin base oils.
In its S.E.C. filing, Probex said the joint venture partners plan to borrow at least $37.2 million to pay for the plant. The partners, sister subsidiaries of an unidentified European parent, own an 85 percent stake in the joint venture, and Probex owns the remaining 15 percent. Probex has agreed to make an initial contribution of $159,000 and will have to increase its contribution to $1.9 million to help pay for construction and start-up.
The agreement gives the joint venture exclusive rights to build additional plants in Europe using the ProTerra technology.
Fahey said Europe affords some advantages to used oil reprocessors that the United States does not. European nations impose sales taxes on new motor oils, and use the proceeds to help oil collectors segregate on-road motor oils from industrial lubes. As a result, reprocessors enjoy lower costs while producing higher grade stocks. In addition, European governments have incentive programs to encourage marketing of rerefined products.